Former CFTC Chair and ‘Crypto Dad’ Chris Giancarlo Issues Stablecoin Warning

After the GENIUS Act was passed into law this summer, stablecoins in the U.S. are set to explode. PayPal has one, the President’s family has one – and just this week, the state of Wyoming announced they will also have one.

But as everyone suddenly issues their own “digital dollars,” what will the impact on America be? And could there be unforeseen consequences of letting a bunch of private companies now issue wrappers around something Americans already use as cash?

Former Chairman at the Commodity Futures Trading Commission Christopher Giancarlo has been focused on these questions for years. He’s even started the Digital Dollar Project, a non-profit forum focused on exploring how digital money innovations are changing the payments landscape and America’s financial system.

And yet, even he – a supporter of crypto so strong he’s won the title “Crypto Dad” – is not shy about some of the hypocrisy forming around centralized stablecoins becoming the lead narrative in a space that once championed decentralization and permissionlessness. In particular, Giancarlo laments that the first major piece of crypto legislation essentially just codified certain surveillance practices that were already commonplace in traditional finance.

“One of the things the Digital Dollar Project stands for is the need to futureproof the dollar while preserving its reserve currency status. But most importantly, thirdly, protecting the values for which the dollar historically stood for,” he tells Coinage in a new interview. “And this brings me to my one disappointment with the GENIUS Act: It's done nothing to advance financial privacy. If anything, it imposes the full panoply of financial surveillance that exists in our banking system, on our stablecoin system, quite disappointingly, because I think the way we win the future is not just by digitizing our dollar. We win the future by making sure the values of democratic society exist in our currency, because they're not going to exist in Chinese digital currency.”

Indeed, America is in a race to export stablecoins around the globe and maintain the dollar’s reserve status for so many around the globe. But fast on its heels is China – seeking to capitalize on President Trump’s isolationist, “America-first” mentality.

Case in point, China is looking to tap into its existing influence among the BRICS group of nations to get them to use a digital yuan instead of a digital dollar. Right now, China’s currency accounts for a measly 3% of international trade, whereas the dollar boasts being used in nearly half of all transactions. But if China’s digital yuan is any more successful than dollar-based stablecoins, America’s lead could quickly diminish.

Nowhere is this economic race more evident than the crypto-forward nation of El Salvador. Perhaps it isn’t a surprise to see President Trump lean into relations with the relatively small Latin American country. Despite its size, it’s also unique in that the entire country uses the dollar as its currency. Perhaps, then, it also shouldn’t be a surprise that the world’s largest stablecoin issuer, Tether, just relocated its headquarters to El Salvador last year.

China and the U.S. have been jockeying for influence in El Salvador for years. The stunningly beautiful National Library in downtown San Salvador has a glowing neon sign that proudly notes "assistance from China for a shared future." China paid more than $50 million to help establish the library in 2023 as the largest in Central America. Not to be outdone, Trump has also cozied up with El Salvador President Nayib Bukele, offering to funnel detained immigrants and prisoners to his mega prison.

Being a dollarized economy, it would be a shock to see El Salvador experiment with a digital yuan – but it's the same choice other countries may soon face. As Giancarlo explains, those decisions – even from small countries – can stack up, and the stakes couldn’t be higher for America.  

“I'll argue to anybody that the dollar as a reserve currency has been not only good for the United States, but I think it's been good for the world,” he said. “I don't think the last 30 years of globalization, in which more people rose out of poverty... than ever before in human history. I don't think that would have happened without the dollar as the world's reference value proposition … and I think if we get the values right, the world will be grateful for access to a dollar.”

But as America has made its choice to embrace privately issued stablecoins over a government issued digital dollar like China’s, could that also introduce unforeseen divisions among Americans at a time when we as a nation are already so divided?

For example, President Trump’s family recently launched its own USD1 stablecoin via their crypto company World Liberty Financial. Eric Trump and Zach Witkoff, World Liberty Financial co-founders, have both boasted how quickly USD1 is being adopted. And while the President’s digital dollar may have a long way to go to catch the likes of Tether’s $167 billion market cap at its own size of just $2 billion, it’s gaining ground fast. 

“It’s currently the fastest growing stablecoin in the world,” Witkoff recently boasted on CNBC. 

Days later, the state of Wyoming also announced they would be launching a stablecoin of their own. Yet, unlike Tether, USD1 or other major stablecoins, the Wyoming stablecoin won't have profits go to a big corporation. Instead, the interest revenue made from holding the cash reserves backing the stablecoin in a bank will go towards Wyoming’s School Foundation Program to benefit schools in the state.

It’s a pretty fascinating experiment, but does start to beg the question, if Americans have to suddenly choose between a bunch of different “digital dollars” supporting a bunch of different causes, or politicians, does that start to erode the fabric of the currency that holds us all together as Americans? Giancarlo sees things more optimistically.  

“I'm a big believer in competition. I think the type of competition you might see might be good for innovation,” he says, harking back to the days that old branch banks offered freebies like free toasters to entice customers to hop from one bank to the other. “You could see similar things happening now where stablecoin operators fight fiercely to get each marginal user. And I think they'll do it through a combination of giveaways and non-interest like instruments.”

But as the space matures, Giancarlo is hopeful that America’s unique capitalistic competitions aren’t the only things advancing stablecoins. He also hopes to see a revived push for privacy.

As the GENIUS stablecoin Act advanced in Congress, it did so along a sister bill championed by House Majority Whip Tom Emmer, which sought to block the U.S. from ever pursuing a publicly issued dollar, or Central Bank Digital Currency (CBDC) like China’s digital yuan. Part of that reasoning was to prevent state surveillance on everyone’s transactions. But as Giancarlo points out, the government still actively works with private stablecoin issuers to do the same, just as banks are required to.

“Tom Emmer is a great leader and he's done great work in the House, but I have to say that the whole notion of passing an Anti-CBDC Act … was a bit of Wizard of Oz ‘Don't look behind the curtain,’” he said about the push in Congress to get legislation across the finish line. “I may have annoyed a few people in Congress when I published an op-ed in The Hill not too long ago, saying that there's a flaw in the stablecoin legislation, and that flaw is that it really doesn't protect financial privacy.”

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